You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, our next guest is headed up Brooks running from more the twenty years Brooks, of course, being a century old Seattle based company that makes a shoe with a guest running gear. If you go back some twenty years ago, this was a company tinkering with bankruptcy and got one more thing for you. It is a subsidiary standalone company of Warren
Buffett's Berkshire Hathaway. The journey is all in a book by Brooks running CEO Jim Webber, his book Running with Purpose, How Brooks outpaced Goliath competitors to leave the pack. Jim joining us via zoom from Seattle. Jim, it is so nice to have you here with Tim and myself on Bloomberg. How are you and how are things going? Well? I'm excited to be with you today, Thanks Carol and Tim,
and things are things are good? Right? It's volatile. There's so much disruption, as we all know in the business world over the last two years especially, but all through it people are running and they're buying gear and they're getting outside. And so we feel fortunate because running made the hut in this crazy COVID disruptive world that we've been in. And uh, we've had a record year last year, and I think we're gonna have another record here this year. Wow,
because that's what I wanted to ask you, Jim. I mean, we're passing through big earnings, Google, Microsoft, Visa, GM today, so many Uh, and you are someone who understand right when you came to the company, it was in turmoil. You understand pressure, you understand stress, you understand volatility. So how would you kind of place today's challenging environments. You're doing really well, but when you take a step back,
how does the macro environment feel to you? You know, I think there's there's more uncertainty in our world, maybe than ever before for business people. And you know, there's so many things you don't control, and and that's such a cliche, but it's just true. So we start with the fact that we're going to have things that we have to navigate that we don't control. And so I think the key for us has been customer focused. And I'll give you one example, Carroll, you know, and in
when in March the pandemic hit. All the lights went off all retail clothes. We had no radar for demand, what was going to happen. And because we were customer focused on the Runner, once we saw them starting to run and buy gear, we we sort of you know, hit the gas pedal again. So so I think the key for us to navigate all these crazy times is our customer focused on the Runner and its advantage. I think we have because it's it's it's all we do.
Jim back in, it feels like years ago at this point, Uh, you moved or shed much of your presence in China this according to Reuters, and instead moved a lot of the shoe production to Vietnam. I think that for a lot of people, that looks really prescient doing that before COVID even hit. But I'm wondering if that actually managed to help you over the last two years. Because it's not just China where supply chains are are snarled. This
is a worldwide issue. There's no question about it. Tim, and and you know the truth of the matter is that last fall being in Vietnam, in the south of Vietnam where where many of our key production partners were was a tough place to be because for three months, almost half of our our production capacity did not make one shoe that was in Q three last year, and so we're we're short on inventory now, we're not delivering demands. So I don't think it matters maybe where you are.
Of course, the supply chain disruption and transportation and logistics has impacted impacted everyone, no matter what your product is. So yeah, I think I think it's been super challenging. But you know, given our history, we've been through challenging times before, and so you know, our team rolled up our sleeves and we just have to roll with, you know, the changes that have come forth and do our best to keep our customers informed, and we communicate with our
retail partners and runners. You know, we don't have all the product that they are demanding today, but you know, we're doing our best to help them understand why. I would say though in the last several months, things have stabilized for us, you know, in our industry, and that you know, we've been pretty much running at full capacity now for over four months, so we're no more normal mode,
if there's such a thing as normal in this supply chain. Well, you know we're going with we're going with smaller boats to smaller ports. Um air air freight isn't even affordable anymore. So we've just tried to navigate around, you know, the constraints that that are out there in the supply chain right now that we all have to deal with and costs your up. But you know we're because you know, again we're focused on the customers. So we just we're trying to do our best to navigate through that and
supply demand well. And in terms of pricing, what kind of pricing pressure leverage do you have with consumers right now? And just got about forty seconds and then we're gonna come back, and I promise we're gonna talk in Yeah, I would say, we don't feel like we have a lot. We've raised prices where we could modestly, I would say, And we don't raise prices every year. So this is the first price increases that I think we've made on
our key shoes. The adrenaline goes in probably three or four years, so so we have raised selectively some prices up. But you know, we don't think the consumer can bear bear everything, so we've got to navigate that all right, sit it for a second. We're gonna come back to Jim and we are going to talk more with Brooks Running CEO Jim Webber. He has a new book out, UH and as we mentioned, the forward is by Warren Buffett, Running with Purpose. How Brooks out pace goliathe competitors to
lead the pack? And I do think this is just such a great point, especially where we live in an economy where upstarts and smaller companies can really disrupt, like what Ellen Musk did with the auto industry. Yeah. I really want to talk about innovation when we return, and
really what consumers want in this day and age. We have competitors making shoes from recycled materials, more earth friendly focus, and I'm wondering how we've seen that at Brooks and what's it like when the Musk want elon must give me. Warren Buffett says he wants to buy your company. You say, okay, maybe come on in. I want to get back to Jim Webber, CEO Brooks Running. He's still with a sun zoom from Seattle. His new book, UH that is out
is Running with Purpose. How Brooks out pace goliathe competitors to lead the pack. Jim, thanks for staying with us. UM talk to us about like, what's the first your first exposure or interaction with Warren Buffett when he became interested in the company. Well, it goes back for me. I was reading his annual letters when I started in the business world in the eighties, so I felt like
I knew him. But we were owned at the time by for the Loom, which was a Virture Hathaway subsidiary, and we began to sell shoes at the annual meeting Expo, and so I sent him a note saying how much fun we had, and we met a lot of shareholders, we sold a lot of shoes, and he said, great, if you're ever in Omahawk, come by. We'll go have a steak. And so I went. I went to lunch
with Warren. We met for three hours and and I knew he was going to like the Brooks story because it's we're building a brand very uniquely and distinctively, where a challenger brand in a great category, and it's a great business and and we've been growing at double digit now for literally for twenty years. So I knew he would he would be intrigued by the story, and it was just a wonderful meeting. And he's a sponge, He's
just so curious about anything in business. And and that's the conversation, the first one that we had about Brooks. What about the conversation, sent I mean, how would you
characterize how much you're in touch with Warren Buffett? I mean he even himself in the forward to your book rights that Berkshire Hathaway has followed a dramatic hands off style in its operations, with only twenty five employees, well three sixty employees go about their jobs and the many dozens of individual companies like Years, Yeah, so does he talk to him? I believe Berkshire must be one of
the most unique corporate cultures in all the world. I cut my teeth at Pillsbury, and in banking and and and then in in building brands like Brooks. But Berkshire is so unique. They never call in one sense. You know, they've described they have a very distinct acquisition strategy and investment strategy looking for great businesses, but once they buy the business, they don't. They don't require us to morph
our reporting around their needs. They take all of our reporting in the way we want to look at the business and we share it with them. So so they morph to these hundreds some different businesses. We don't morph to them. And so the only why don't we send them our quarterly reports and any report, much like any any public company would do, and the only required conversation is annual camp frankly and uh, and they they empower
us to run the business. We love that we take full responsibility for everything that happens here, good and bad. And Uh. You couldn't ask for a better home if you want to build a brand in It's wonderful. It's like our lesson is we're always told like if you don't hear from your bosses, that means you're doing your job and that's good. So it's like it's when there's problems, that's when they come. They come a knock and they expect you to manage it and solve those problems. And
we know that, so it really works. Great. What did you learn in doing this book? Because it sounds like you know you obviously when you came to the company it was very different. It was, as I mentioned earlier, like on the brink of bankruptcy, a lot of different heads of companies um tell us about that journey. Yeah. I think the reason, one of the reasons I wrote the book is Brooks is a is a fantastic challenger
brand story, and and we're in a great category. It's global and running and every big platform brand some of the best brands in the world, from athletic footmar and apparel, from the outdoor industry, from fitness is doing rhyme gear, shoes, head to tell, and and obviously Bras and jackets and
everything else. So that's where we're competing. But I think in the world there are more challenger brands and there are leading category platform players, and so I wanted to share the story because I think what we're doing is has been a lot of fun, and it's we're building a great brand and a great company and uh and hopefully there's other people that are involved in categories. Maybe there are a challenger brand that will get some value
out of it. But what let the turnaround because you are a smaller player and what is a massive you know, I just go down the block and there's the huge Nike store, Like it can be tough being a smaller player in a market that's got some really giant players. There's no question about that. In every category is unique. But I think the key for us has been an absolute obsession on runners mile after mile and and with the right people, we can actually build better product than
the largest companies in our industry. And in many cases we do in our sales and and our customer affinity reflect that. So we're earning the customer. Um, it's not an accident. I say, we've built this billion dollar brand of parapet of the time, and it's really true. You know, we've gone after the most discerning runners out there that that are putting high mileagein and trying to build gear that mile after mile, they know they're going to buy
that shoe again. How do you really challenged ourselves to to earn their second pair of purchase? Jim? How do you continue to grow though with such a sharp focus. How do you make sure that you're still expanding, that you're creating new products that appeal to a larger number of people that goes beyond that core serious runner. Well, here's the key is that the running category is huge.
A hundred and fifty million people run worldwide on a regular basis to compete or to invest in themselves and um, and then of course it's much broader than that walking and and just hiking and trail running. They're all wearing shoes, right, So it is a huge category. And so we're trying to build a very unique, focused brand with with within this monster category. And you know, we've got we've got
growth runway for the next decade. We believe that our niche in this category in the next two years could be a four billion dollar brand. So we've got plenty of opportunity. What's been the most difficult time though at the company was at first coming in and just dealing with kind of a really messy environment, or going through the Great Recession, or even going through the pandemic. What was the trickiest time? You know? And I share a lot of the stories and things that we've had to
navigate over twenty years. The hardest one for me, I would say, is when the customers shifted. Um. We see there was a big newspaper article in May of sixteen of how millennials killed the running boom, and the key is millennials. Millennials right, theory a project to be They were still active, but they were doing a lot of different things. So we had to resolve for that and
recommit to some things that we believed were there. We we planted a flag that performance was timeless and that some people are always gonna want the best gear, and gosh, that's you know, we've doubled our business since and so that that in that focus has paid off for us. But the customer decided it and uh, fortunately, I think we've been able to create create gear that's just resonating with the runner. Jim, you've been CEO since two thousand one. What's next for you? I mean, how long do you
stay at Brooks? You know. One of the things that happened to me, Brooks was the fourth business I ran. I came out of consumer products and sporting goods. I became a sporting goods person. But what by the time I got to Brooks, I really wanted to build a brand and you had to do that over the long term. You can't really build you can't create fabulous value in three years. And so when I came in, I committed to build it, you know, be part of a team that was going to build a brand. And I still
have it. I think, I really think I have the best job in the business. World. It's just fun and we like our jobs to well. Come back anytime, really fun and inspirational to talk with you. I'm glad you're doing well. Jim Webber, Chief executive Officer Brooks, running via zoom from Seattle. His new book, Running with Purpose, How Brooks outpaced Goliath competitors to lead the pack.